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Virgin's profit falls by 56%

Virgin Australia's first half profit has slumped by 56 per cent but it expects to improve its underlying performance despite challenging economic conditions.

The airline made a net profit of $23 million in the six months to December 31, down from $51.8 million in the previous corresponding period.

The difference was mainly the result of Qantas' industrial dispute in the previous corresponding period, which benefited Virgin.

Virgin on Tuesday also said the carbon tax had a $24.4 million impact on its profit in the six months to December.

The company's underlying profit before tax was $61 million in the six months to December, down from $96.1 million in the previous corresponding period.

Virgin maintained its forecast of a full year underlying profit before tax being higher than the previous year's $82.5 million.

No dividend will be paid to shareholders.

Virgin said revenue rose five per cent to $2.11 billion, with the airline group carrying more than 10 million passengers in a half for the first time.

The airline said yields - an industry measure of average airfares per passenger - fell one per cent in the half, which chief executive John Borghetti said "reflected the aggressive capacity and pricing environment".

Industry figures showed that the 10.8 per cent increase in domestic capacity in the first half was the highest increase in the local market in eight years, he added.

"The group has delivered a solid result in a difficult operating and economic environment, reflecting the significant progress we have made in diversifying our revenue base and improving cost control, while continuing to enhance the customer experience," he said in a statement.

Mr Borghetti said the airline found $25 million in "efficiency gains" in the first half, and was on track to deliver $60 million in savings by the end of 2012/13.

Virgin forecast 2012/13 second half domestic capacity growth would be between five and seven per cent up on the prior corresponding period.

Qantas gave the same forecast at its half year results on February 21.

Virgin said it would offer twice daily flights from Brisbane to Perth using wide-bodied Airbus A330 aircraft from May.

It also would begin flights on "current monopoly routes" Brisbane to Moranbah and Bundaberg, Virgin said.